A Poll

Tomorrow sees the release of what could be a critical NFP figure. After another solid run-up in risk assets, perhaps markets are vulnerable to a poor number? Anyhow, it may be instructive to see where punters expect the SPX to trade until MM returns...vote in the poll below!

Yeah, I want a <950 option, too. :) With Deutche Bank jacking their prediction to -150K (far from the consensus - they will either look like geniuses or fools) today (and Goldman also updating to a more optimistic forecast), there is more potential for a bad surprise to move the markets. On the other hand, the markets have shrugged off anything that resembles bad news for the past four months, and they probably will power higher no matter what the number on Friday.

Smart people like MM appear to have been taking short positions selectively and covering them will a call option and a tight stop and then riding the vol up. Less intelligent people such as myself have not managed their sharpe quite so well with options and have had their vol blow out as a result even when they get it right. Moral of the story: pay up for carry when trading directionally.

JohnL I read a shift in sentiment towards the USD - buying for a recovery story (the consumer obviously overshadowed by the "broken window" metrics of the clunker scheme adding 1-2 points to H2 GDP or the pure inventory restocking lift) rather than USD as a pure risk barometer. Particularly on the €$, $JPY, $WTI and $XAU.My tuppence.JL

as a micro reader....all i can say is that i find indices elevated but an abundance of interesting single stock longs. companies have cut costs and are very lean. a small uptick in demand would drive significant upgrades in earnings. people may have issue with funnies and distortions from earnings but the reality is that cash flow has improved and that credit spreads have tightened as a result. it is merely the rally from the lows that make us all bearish, not individual company valuations. pick stocks and buy index puts would be my advice, maybe not what the macro investor wants to hear. saying that, the obsession in the market with the index level says it all. the reality is that pre lehman people would have said a stabilisation in US housing would reverse their bearish views. people now want to back away from that. lehman was a mistake and many of the issues that flowed from that are now being reversed. witness the writebacks at deutsche and bank of america. a stock pickers dream scenario. index protection cheap and a selection of stocks on historic lows in terms of sales and book multiples. until the end of earnings season, 1000 on the S&P has just become support it seems. wait until the institution get long before you sell. there is not enough wait on the long side for this market to sell off. the pain trade is up.

one interesting observation i heard on volumes is that low volumes are often seen as an invalidation of a trend. however low volume can also show a lack of supply. that makes sense to me. the next big move on volume will be to buy equities. only then can we have a sell off i.e when the big players in the market are positioned long. not before.

A sure sign that the US residential market has more weakness- Hugh Hefner struggled to sell a mansion next door to the Playboy mansion- article on The Telegraph.If you can't sell a property next door to the playboy mansion at the ask, times are bad.http://www.telegraph.co.uk/finance/financetopics/recession/6007514/Hugh-Hefner-sells-LA-property-as-financial-crisis-hits-Playboy.html

Time for a poll on whether QE will continue. I suspect that it will not, not least because it didn't really work and because the Fed will focus on the TALF now, with a view to CRE assets, but opinion seems to be divided.